As the son of an international diplomat, Osman Rashid is no stranger to travel. He was born in London and raised throughout Africa, Europe and Pakistan. Although Chegg Inc., the online textbook rental company he co-founded in 2003, has him settled in Santa Clara, California, Rashid hasn't let go of his global ways, especially when it comes to his portfolio.

Rashid owns a total of eight land, residential and commercial properties in developing regions of India and Pakistan. In the past four years, he has seen a 300-percent appreciation of his assets in Pakistan and expects considerable returns in the high-growth city of Mysore, India. Rashid, 38, hopes to double his exposure in those markets in 2008.

As a whole, the asset class is expanding--if the number of new international real estate funds is any sign. Morningstar cites the fact that 51 of these funds opened in 2007 alone, up from a total of eight new funds in 2005.

Experts say the boom is due in part to more countries adopting the real estate investment trust, or REIT, model. "There's a much more interesting investment universe than a few years ago, as the sector broadens out," says Sam Lieber, portfolio manager for the Alpine International Real Estate Equity Fund (EGLRX). There's also the allure of geographical diversification and the hope for better returns amid a weak domestic real estate market.

"The U.S. real estate market is decelerating now," says Bruce Lavine, president and COO of WisdomTree, which launched the WisdomTree International Real Estate Fund (DRW), an exchange-traded fund, last summer. Other newbies include the DWS RREEF World Real Estate Fund (DRP) and the Schwab Global Real Estate Fund (SWAIX).

Don't Go Overboard
Fund watchers say the overseas real estate rally is far from new. "Investors have to realize that the returns people are starting to see in these international funds, a lot of this momentum started five or six years ago," says Andrew Gogerty, lead analyst on real estate funds at Morningstar.

The risk-averse should go for funds with a track record of relatively strong returns compared with the broader market as well as those with experienced fund managers, suggests Gogerty. Alpine's fund, for example, has been around since 1989 and has about $2 billion invested. The five-year annualized return is about 26 percent, outpacing the S&P 500 and the Dow Jones Wilshire REIT Index. Lieber says he's attracted to the recent pullback in emerging markets, such as Brazil. Cyrela Brazil Realty is one of his latest picks.

Seek Transparency
One of the biggest risks of investing directly overseas is marching in with a blind eye. "It's easy to lose your shirt when you're investing in a foreign real estate market and you don't really know what's going on," says Brad Case, vice president of research and industry information at the National Association of Real Estate Investment Trusts.

When choosing REITs, more secure bets include U.S. REITs that are forming partnerships with foreign businesses to offer investors greater global exposure with the promise of transparency into those companies and foreign regions. Case recommends AMB Property Corporation (AMB), Kimco (KIM), Prologis (PLD) and Simon Property Group (SPG). Investors can find more information at investinreits.com.

Meanwhile, Rashid is a bit wary of Pakistan's volatile political climate, but he remains bullish about his investments there and doubts unrest would cripple the market. Says Rashid, "They're used to political instability. It's almost like a part of their life."